I teach ethics on the CQF, (yes a headhunter teaching ethics to bankers, go figure)
Part of my argument is that the world is not only non deterministic, you can't realistically know what is best for most other people.
Yes there are some obvious bad things, but in general it is tough. In British law we have the notion of "Gillick Competence" and I draw from that to the notion that if someone freely chooses to pay you to do something then by default you are behaving ethically, since they usually know what is best for them better than you do.
Of course as a quant, you are paid to know more than average people, so again we look at medical ethics to the idea of "informed consent", ie it is bad to over ride someone's best interests by your superiority in this context.
So we can generalise this to society as a whole.
We are paid to do stuff, society could at any time stop any activity in banking either on a large or small scale.
It chooses not to stop banking, though it is restricted in what it can do.
Has modern finance made the economy better ?
I believe this is trivially obviously the case.
Over the last 20 years the credit bubble has caused one of the greatest expansions of wealth ever seen by the human race.
The problem for most commentators is that not enough white people were made richer
We have taken a whole billion people out of the most abject poverty. This is the level of poverty where letting your daughter survive is an unaffordable luxury, not "I can't buy the new iPad".
Without the credit expansion the opening up of China and the move towards markets in India and much of Asia would have been small almost un-newsworthy items.
Depending on what you measure, we have fallen back to the dark ages economically, 2006 by most estimates I read.
You're mostly young on this forum and don't remember clearly the famines in the US midwest of 2005, the breakdown of civil order in Rome, refugees in their millions fleeing Canada, oops that didn't happen. We landed badly; that's partly the fault of bankers but equally politicians. The sovereign debt crisis in Greece et al was caused by government, should we be also asking "Is politics ethical" because there is no siginificant political party in the civilised world that does not share the blame, Democrats, French Nationalists, Berlusconi's gang, advicates of European unity, opponents of European unity, the British Labour party, Greek Communists, the Icelandic ruling party, Republicans, all of them of every and any political position, the only commonality is they are politicians.
Almost without exception they are arts graduates, that holds true far more than any other characteristic including race, nationality, sex or faith.